4. GDP and Related Measures Suppose an economy produces only 2 products that will also be used for direct consumption, as per the article at the end of the exam: chicken wings and donuts. In the second quarter of 2021 (the base period), 180,000 pounds of chicken wings were produced, at a value of $3.50 per pound, while in the second quarter of 2022, production of chicken wings increased to 200,000 pounds, at a value of $3.75 per pound. In the second quarter of 2021 (the base period), 85,000 donuts were produced at a value of $0.85 per donut, while in the second quarter of 2022, donut production increased to 100,000 donuts, each at a value of $0.95 per donut. The population in this economy is 1000 individuals in 2022, while the number of hours worked in 2022 is 5000. Also, the quantities that were produced in 2021 represent the quantities that were purchased the typical household, meaning that everything that was produced was sold. a. Solve for real GDP in the second quarter of 2021. b. Solve for real GDP in the second quarter of 2022. c. Solve for the CPI in 2022 (assuming in this question only, that it is measured quarterly, so the market basket will be for the current and base quarter, instead of current and base month). d. Solve for the amount of labor productivity in the second quarter of 2022. Solve for the real GDP per capita in the second quarter of 2022. e. f. During which phase of the business cycle would an economy experience decreasing values in the real GDP and real GDP per capita?
4. GDP and Related Measures Suppose an economy produces only 2 products that will also be used for direct consumption, as per the article at the end of the exam: chicken wings and donuts. In the second quarter of 2021 (the base period), 180,000 pounds of chicken wings were produced, at a value of $3.50 per pound, while in the second quarter of 2022, production of chicken wings increased to 200,000 pounds, at a value of $3.75 per pound. In the second quarter of 2021 (the base period), 85,000 donuts were produced at a value of $0.85 per donut, while in the second quarter of 2022, donut production increased to 100,000 donuts, each at a value of $0.95 per donut. The population in this economy is 1000 individuals in 2022, while the number of hours worked in 2022 is 5000. Also, the quantities that were produced in 2021 represent the quantities that were purchased the typical household, meaning that everything that was produced was sold. a. Solve for real GDP in the second quarter of 2021. b. Solve for real GDP in the second quarter of 2022. c. Solve for the CPI in 2022 (assuming in this question only, that it is measured quarterly, so the market basket will be for the current and base quarter, instead of current and base month). d. Solve for the amount of labor productivity in the second quarter of 2022. Solve for the real GDP per capita in the second quarter of 2022. e. f. During which phase of the business cycle would an economy experience decreasing values in the real GDP and real GDP per capita?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4. GDP and Related Measures
Suppose an economy produces only 2 products that will also be used for direct
consumption, as per the article at the end of the exam: chicken wings and donuts. In
the second quarter of 2021 (the base period), 180,000 pounds of chicken wings were
produced, at a value of $3.50 per pound, while in the second quarter of 2022,
production of chicken wings increased to 200,000 pounds, at a value of $3.75 per
pound. In the second quarter of 2021 (the base period), 85,000 donuts were produced
at a value of $0.85 per donut, while in the second quarter of 2022, donut production
increased to 100,000 donuts, each at a value of $0.95 per donut. The population in
this economy is 1000 individuals in 2022, while the number of hours worked in 2022
is 5000. Also, the quantities that were produced in 2021 represent the quantities that
were purchased by the typical household, meaning that everything that was produced
was sold.
a. Solve for real GDP in the second quarter of 2021.
Solve for real GDP in the second quarter of 2022.
b.
c. Solve for the CPI in 2022 (assuming in this question only, that it is measured
quarterly, so the market basket will be for the current and base quarter, instead of
current and base month).
d.
Solve for the amount of labor productivity in the second quarter of 2022.
e.
Solve for the real GDP per capita in the second quarter of 2022.
f. During which phase of the business cycle would an economy experience
decreasing values in the real GDP and real GDP per capita?
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